The Commodity Matrix: What Is The Resource Of Tomorrow, And Who Will Benefit From It?

While it is impossible to predict where the S&P will be in 10 years (or even 1), one can safely make some assumptions about what the world will look like in a decade (assuming of course it hasn't blown up by then). It will be hungry, it will be thirsty, it will demand resources, and it will be crowded (and it will certainly have lots and lots of wheelbarrows carrying pieces of paper to and fro the local bakery). Implicitly then, countries which control the production and export of various key natural resources and commodities channels will become increasingly more strategic and important. However, for some economies, such as the Middle East, whose entire export-based welfare is reliant on a core set of commodities, this export-benefit may be a doubled-edged sword, should it lead to militant antagonism by one time friends and outright enemies, and/or complacency leading to lack of revenue stream diversity. In order to determine who the key resource players in the future will be, we present the below commodity trade matrix which answers two questions: how important is a commodity to a country, and how important is a country to a commodity. As GS notes, those on the riskier side of this equation are economies that are heavily reliant on oil, such as the Middle East or even Russia (which albeit scores better on other hard commodities). On the other hand, food exporters enjoy relatively better diversity in their trade portfolios. We highlight the LatAm economies here, while Canada and the US also look healthy. Will food (and water) be the oil of the future, and will the next resource war be not over black, or even yellow, gold, but, pardon the pun, edible gold?

Some additional observations via Goldman:

Not all countries are blessed with abundant resources, and even among those that are, some countries have benefitted a great deal more than others as a result of the quality of their institutions. Indeed, resource wealth can, and has, tempted institutions to retain the revenues narrowly, rather than distribute them broadly or develop others parts of the economy. This is the reason why the presence of resources hasn’t historically guaranteed economic success. Australia, Canada, Russia, Brazil and South Africa are countries that have high levels of hard commodities per capita, while Argentina and the US should be added to the list if soft commodities are included.

But what are the resources of the future? We think it very likely that food, water and therefore land, will become increasingly important, tilting the advantage in favour of those capable of feeding the next billion people. As two of the world’s largest populations industrialise (hence producing less of their own food) and become wealthier (and hence hungrier), the way food flows around the world is likely to change significantly. Russia, South Korea, Japan and much of Western Europe are major food importers currently, while Brazil, Argentina, the US, Australia, Thailand and Canada sit on the other end of food trade. Here we have to mention Africa and India as regions with huge potential, but in need of greater institutional support to deliver it.

The current debate on the resources curse (the potential for resource-rich countries to become imbalanced) is also important. Being heavily reliant on a particularly commodity is risky as a result of the possibility of big shifts in the global economy, innovation-led substitutes or new discoveries. It is not implausible, for example, to imagine EM consumers extinguishing their demand for cigarettes just like their health conscious Western brethren did a few decades ago. This puts tobacco-heavy African economies like Zimbabwe at significant risk. Above is a commodity trade matrix to answer two entwined questions: how important is a commodity to a country, and how important is a country to a commodity? As expected, those on the riskier side of this equation are economies that are heavily reliant on oil, such as the Middle East or even Russia (which albeit scores better on other hard commodities). On the other hand, food exporters enjoy relatively better diversity in their trade portfolios. We highlight the LatAm economies here, while Canada and the US also look healthy.

The last question is which countries have succeeded despite resource deficits? Japan and South Korea stand out here, which cements our argument that necessity, in this case driven by constraints, is the mother of innovation.

Pfft...who is going to listen to our government and go fight a war with some country not threatening our country?

Yeah, I would go overseas to fight a war some assholes started with people I have no "beef" with. /sarcasm. If I made it back home alive I can look forward to no jobs and concentrated wealth in the hands of the 1%. You would have to be an idiot to show up if you get drafted for a war for this country now. Let the politicians send their sons or the sons of the 1% off to war (will never happen), afterall they are the war's beneficiaries. The social contract is no longer intact. The assholes who run our country have torn it up and are telling us it still exists. No way I would fight for this "country" now.

Let the illegal or even legal immigrants they let into the country every year that steal the average Americans' jobs and/or push down wages go fight the wars.

This is a read-between-the-lines article. If there are 11 million illegals living in the US, how the HELL is there a shortage of farm labor? Hmm...I wonder if government handouts have anything to do with it?

The sad thing is, I've known a lot of LEGAL immigrants who come to the US and are furious about the racial amnesty(ies), but don't speak up about the injustice because they see the hate coming from the left and think that they will be "carted away" like they would in their home country.

As a side note, I've noticed (East) Indians out here in the West - nearly all LEGAL immigrants - have been targeted for robbery because 1) They have gold and 2) They have assimilated & adapted to US laws and social norms, but think that if they arm themselves, they will be looked down upon by the touchy-feely jokers out here. Hence, most are defenseless.

The amount of brainwashing and PC bullshit is totally destroying the US, as well as destroying the immigrants who come to this country to actually work to build a better life for themselves. It's so hard for me to believe that we are repeating the "Fall of Rome," to the letter. Almost like the fucks in power are using it as a manual. WHY THE FUCK do we need history lessons in school? Obviously, no one is heeding the lessons!

Just read Roman history. When they went into that deficit spending spiral, nobody local wanted to fight their wars to repump the riches pump by beating up and raping an "alien" nation. So what did Caracalla do when the shit hit the fans in Rome?

He conveniently made citizen the local "slave" population; aka the nonvoting serfs!

Didn't stop the rot. As those "illegals" now "legals" started thinking like the original "legals" and refused to fight those wars!

And Rome went...boom! And Constantinople became new Rome. One reason why it went boom was that the Romans hired the Barbarians to fight their wars. Fatal flaw along with deficit spending.

Fuck the boomers. They caused all this dam mess we are in. Free love. Dope on every corner . Doubling of housing prices. Stealing made legal. Now they want us to guarantee their retirement 401k savings. Please. They are P.O.S who sucked the world dry. Self centered ME generation. Piss off.

As a British boomer you can add free education to that list and,as a graduate in the early '70's, a choice of jobs. Now happily retired at 59 with a generous pension and nest egg generated by the housing boom that you mentioned, from £35,000 to £350,000, a tad more than doubling methinks.

On the other hand I am pushing 60 so you can't have it all, but one can't help feeling quite lucky about life. That's about it really surf boy, and no swearing (see education above).

If your house is only worth £350k, I doubt you are in a sufficiently powerful position to resist the "pitch-dark roll-call of the global economy" as it sweeps across you. Pardon the drama, but I like that phrase.

Maybe you don't see a future in which the stress of circumstance results in questions (about what current generations owe their predecessors) developing into actions by which you boomers end up actually not getting what you thought you were. Only you'll be 15 years weaker and slower than you are now and will have ceased to become the fulcrum around which societies revolve.... marginalised if you will.

The younger/middle-aged will have figured out where the money is, designed compelling schemes to divorce you from it (or simply taxed it from you) so I hope at that time, your memories of today are sufficient to keep you warm.

I actually blame the "greatest" generation. Bloated government bureaucracy based on prussian military logic, idiotic wars, expansion of military-industrial complex, misguied social programs, marginalization of blacks into inner cities, debasing of currency, etc. The Boomers are simply the overstuffed, spoiled, checked-out progeny who modeled the "worst" generation.

At least by killing millions of 1st and 2nd world adult males - the greatest generation gave an Unprecedented Gift to their American Boomer children. America emerged from WWII with powerful industry, global military, and lots of broken property in Europe for it to repair/replace, with fewer surviving, productive European, Japanese, and Russian men to compete against it. Not to mention the technological progress that would shortly enable space flight, the computer revolution and internet, etc.

The Baby Boomers are going to give their American kids a giant Bucket of FAIL: a country depleted of oil, a world that is overcapacity, a globalized economy where they get to compete with Foxconn slaves making $2/day, an unbelievable amount of student debt, very few - if any - earthshattering (non-incremental) improvements in technology that will enable real economic growth, massive government overspending, etc.

People will be shocked to discover that in the not too distant future, collapsing populations will be the issue, not feeding the next billion. Countries representing a majority of the world's population now have a birth rate below replacement. Countries with skewed male-female ratios, like China and India, make their birth rates much worse than they appear. There will be latent population growth for a few more decades, but by the end of this century there may be billions fewer people than there are today - and that's assuming there are no major conflicts or Spanish Flu-like pandemics.

Everyone has made plans around the planet well in advance for this contingency. It dawned on me that's why nobody talks about the obvious population problem in Asia. Simply because things will shift enough to displace or cull the populations there. Same reason nobody is in a big hurry to seal up Fukishima. It'll all be underwater soon.

I haven't lived that long yet but in my lifetime have seen winter snowfalls (in Canada) go from abundant to zilch. I remember three foot snowfalls tunnels - and now - in the area where I grew up - dusting of snow at Christmas.

"where's water?" Right outside my front door. In the form of Lake Superior, largest of the great lakes and deepest. One of the largest volumes of fresh water in the world.

One expects that by the end of this decade some thristy parts of America will be eyeing this water source. Tough Canada and the USA must jointly manage this great fresh water source.

SOme years back a bright company came up with the idea of using tankers to load up with fresh water on the lake and then sail the seaway out to the Atlantic and then on to the Middle East where a full tanker of clean fresh drinking quality water was quite valuable. Before even one tanker could load, the USA/Canada joint commission on lake management halted the attempt to load. Since then I have heard nothing of any other plans to export water.

But it is a sure bet that they will be back in one form or another. There is big money in all that drinking quality cold fresh water out there.

When you take in consideration the importance of the Great Lakes, and the Ogallala aquifer, the "fly over" states may be taken slightly more seriously.

A funny thing, if you look at a map of the midwest railroad network, the Canadian National and Canadian Pacific pretty much have the lions share of rail traffic in the Great Lakes region. And, some of the larger banks such as M&I have been taken over by Canadian firms.

Also, the further north you go in Wisconsin and UP Michigan, the more you might think you are in Canada, eh.

+1 for mentioning ogallala. Huge underground lake that supports the desert that is western NE, Ok, and eastern CO to actually produce food.
One of the biggest assets the US has. Also lets us frack shale gas in the middle of nowhere too.

the ogallal is being drained quickly. there is no way to replenish long term underground aquifer resovoirs without waiting a very long time, potentially millenia or centuries, for nature to fil it back up . the only option to keep the heartland farms wet will be to build an enormous set of pipelines from northwestern canada and alaska , bringing massive quantities of water that ordinarily flow to the the artctic and pacific ocean, towards the interior of the u.s. by pipe. there has been plans to do this for decades.

it's not perhaps the most environmentally friendly idea. certainly it resembles the tar sands solution to oil scarcity. but it's going to happen in the long run, just as sure as the ogallala is drying up. t boone pickens is betting on it.

Water will be an especially valuable resource when fracking eventually poisons our water supply with chemicals. No one even knows what these companies dump into the ground. Anyone who knows anything about water, knows it will find its way into the area's water supply. Clean water was going to be a resource in short supply without fracking. Imagine with fracking added in how much clean drinking water will be worth.

I would never drink or eat anything out of the St Laurence river. Ever. You know how polluted it is?

There's a beach in my area that has a life guard and a mercury warning for the last ten years. Cool cold and refreshing indeed. The amount of heart medication in the river is the reason nobody is insane enough to eat anything out of it...then there's 3M and the rest of them.

Great idea - bad plan. To reap the gold from H2O you must package it. (Packaging restricts access and allows variable pricing.)

The packages must be in little plastic bottles so the consumer must pay HUGE prices for very limited amounts. OR the package must be a pipeline - direct from provider to consumer, that can be metered - to force the consumer to pay HUGE prices for limited consumption. Now, if your tanker was part of a "Water the ME" stock/capital venture plan... and it unloaded at a bottling plant or the head of a water pipe... I'm thinking that it would not have run into reisitance.

While everybody and his kid brother seem to recall "Planet of the Apes"(personally I think the board game was even stupider) so fondly, or if they are a bit more "edgy" they worship him as an NRA spokesman-divinity, I wonder how many recall the 60s, or 70s, post-apocalyptic classic "OMEGA MAN".

Now that was some seriously bad-ass shit, way better than that Red Sea-parting-poofda-shite-fantasy religo-stroke-fest he should also be unable to rest peacefully after.

Don't forget California's marijuana crop at $15 Billion and Afghanistan heroin at a few Trillion. Cocaine might out do soybeans on a good year. There's going to be some pissed off people when these commodities go up. How important are they to the 7/11 workers that aren't heavily armed?

The next big resource will be water that has been contracted for by thirsty Arab countries that have sent billions of electronic dollars to JPMorgan for hypothetical rights to rehypothecated Goldman Sachs water that was obtained through a contract with JPMorgan.

The earth will be a very different place in the not so distant future from what it is now. Something has to give, and it usually does. I don't see a world full of overcrowded urban centers, all competing for scarce resources. Who knows what it will be; global pandemic of some highly lethal super bug, global nuclear war, asteroid impact or other natural disaster, take your pick. But know this:Nature has a way of restoring balance, one way or another. I do believe in climate change {cyclical, not greenhouse gas}, we could be headed for a climate change that makes most parts of the world uninhabitable. That's when things get interesting.

I'm not a "doomsday prepper" - I'm a LIFE prepper - ie I am getting those things that will keep me in eggs and butter and bread and meat - regardless of what the world's doing.

I know one HIGHLY intellegent person (not ME! Tho thanks for thinking of me.) who says it won't be ONE thing. Pandemic? Been there, done that. Carrington event? That would be a bitch, but lots of folks would survive.

She says she expects a "perfect storm" - which will be a confluence/combination of disasters at the same time that will take out a significant portion of the world's population.

Like a pandemic combined with a Super-Carrington event and Yellowstone popping off in a major way... that should do it. You get disease, you get the end of electricity for three to ten years... or longer, and you get global winter (no growing of food) for about 3 to 5 years. Yep... and the preppers would probably starve first because their preparations are for storage and comnsumption - not for learning HOW to make food, clothes, heat, etc. And preppers with their hidey-holes are static, not mobile. In bad times you have to be mobile to maintain maximum flexibility so you can deal with whatever pops over the hill at you...

Even though your friend is probably right, how mobile will you be slogging through 1-3 feet of Yellowstone volcanic ash in Omaha, Chicago, or New York? Nobody has perfect answers for these eventualities, except maybe living in a furnished salt mine, á la Dr. Strangelove, with a 1/10 male/female ratio.

When the ash cloud blots out the sun and starts snowing on you, you do what we figured we'd do back in the '50's in case of a nuke war - you bend over and kiss your ass goodbye cause if you're on the "recycle list" there is NO way out. All the prepping and stashing gold and frozen Twinkies in the world won't do you a bit of good. So you plan and prepare the best you can and let God worry about the rest.

Haven't listened to a "farm report" lately, have you. Corn is now about $7 a bushel (used to be about 3). Soy beans are around $17 a bushel (used to be about 6 or 8). All because of the drought... which is probably caused by the Sun approaching Solar Max on the short cycle, and doing something else on some other cycle...

S&P is based on an agreed price. If Bernanke agrees the price will be 10,000 then that is what it will be. I could even do that if I had my computer hooked up to it as long as I had an infinite money supply.